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Special report of the Acting Auditor General of Québec concerning the special audit on the change in the budget balance of the government for 2014-2015

QUÉBEC, June 3, 2014 /CNW Telbec/ - Today, Mr. Michel Samson, Acting
Auditor General of Québec, made public his report concerning the change
in the budget balance of the government for 2014-2015.

On April 24, the government gave the Auditor General the mandate to
audit the information produced by the Ministère des Finances du Québec
(MFQ) and the Secrétariat du Conseil du trésor (SCT) concerning the
change in the budget balance of the government for 2014-2015 up until
April 7, 2014.

The Acting Auditor General considers that the efforts that need to be
made to meet the target related to the negative budget balance of
$1,750 million have hardly changed between November 2013 and April
2014. They are around $4 billion. Yet, Mr. Samson estimated, following
his work on the November 2013 Update (the Update), that this forecast
was unreasonable. He had therefore qualified it as ambitious. The scope
of the efforts required the implementation of structuring and
sustainable measures. This report confirms the judgment held at that
moment and adds to it an additional perspective.

On April 7, 2014, the MFQ and the SCT informed the new government that
substantial efforts should be made to respect the anticipated negative
budget balance of $1,750 million in 2014-2015. Two reasons were given:
revenues below those anticipated in the 2014-2015 budget tabled in
February 2014 (the Budget) and expenditures revised upward.

As for budgetary revenues, the forecast for the decrease was estimated
at $485 million. The Auditor General's work confirms the increased
probability that the anticipated revenues will not be present. In
addition, it shows that these forecasts do not include a prudence
margin to counter blips in the economy.

In terms of program expenditures for 2014-2015, Mr. Samson notes that
the information held by the MFQ and the SCT clearly established the
scope of efforts that need to be made to respect the objectives planned
since last fall. His work demonstrates that these efforts diminished by
about $400 million between November 2013 and April 7, 2014. Therefore,
the amount of efforts that need to be made has gone from $3,666 million
to $3,248 million.

In terms of non-budget-funded bodies and special funds, the government
has required from them additional efforts since November 2013. In this
regard, a target of $190 million was set in the forecast of their net
revenue in the Budget.

Overall, the efforts that need to be made to reach the target related to
the budget balance are close to $4 billion. The Update and the Budget
presented a limited vision of the state of public finances and did not
disclose the scope of these efforts. The report the Acting Auditor
General presented in February 2014 also showed an incomplete portrait
given the fact that we were not given access to the relevant
information.

In addition, Mr. Samson wants to point out the fact that certain
non-negligible risks should be taken into account to fully understand
the state of public finances as at April 7, 2014. The information
communicated to decision makers at that date does not clearly expose
these risks. Among them is his difference of opinion with the MFQ
concerning the recording of transfer expenditures. This difference
could lead to, according to the MFQ, additional expenditures of about
$1 billion for 2014-2015. Table 3 of his report details all these
additional risks.

The Acting Auditor General wishes to state again that he demonstrated
many times in his previous reports that, from one budget document to
another, the reduction in the growth of the gross debt and the one in
the debt representing accumulated deficits were continually postponed
and that the achievement in 2026 of these debt-reduction targets as a
percentage of the gross domestic product (GDP) will require
considerable efforts and a rigorous follow-up.

According to Mr. Samson, it would be appropriate for the government to
adopt a multi-year game plan that includes intermediate targets.

Furthermore, Mr. Samson considers, taking into account his recent
interventions, that improvements should be made to documents of a
financial nature in order to better respond to the needs of
parliamentarians and of the population. The recommendations made, both
in his report presented in February 2014 and in this report, fall
within that perspective.

The message from the Acting Auditor General, Mr. Michel Samson, is
available on the Auditor General of Québec's Website, at http://www.vgq.qc.ca, under the "Report Concerning a Special Audit or an Investigation" tab
in the "Publications" Section. The full report is available only in
French.